Santa Cruz County Bank In The News

April 13, 2006 Bankers bullish on SBA loans Looking to build on their increased SBA lending last year, local bankers say they are aggressively courting small businesses that are on the prowl for cash. "By far, the most profitable business for us is SBA lending," Santa Cruz County Bank President and Chief Executive Officer David Heald said. "The bank is on target to meet the same goals as last year -- if not more." In addition to targeting the more traditional small businesses who get SBA-guaranteed financing like retailers and manufacturers, area banks are going after companies engaged in the life sciences, "green" energy and semiconductor fields. "This momentum is going to continue," Silicon Valley Bank Chief Operating Officer Greg Becker said. "Life sciences are huge. As baby boomers get older, more medicinal drugs are produced. The IT sector and green energy markets are also gaining momentum for us." The Small Business Administration's San Francisco District -- which includes 13 counties from Monterey Peninsula up to Portland, Ore. -- reported total loans increased about 2 percent to $749 million for its 2005 fiscal year, which ended Sept. 30. Santa Clara County led all counties with 553 loans totaling more than $189 million. On a national scale, the regional district ranked fourth-largest for both SBA 7(a) and 504 loans, in terms of dollar amount. More than half of all SBA 7(a) dollars went to minorities -- the majority of them in the Asian community, which registered 712 loans. Now at the midpoint of a new fiscal year, SBA lending continues to be a highly profitable niche for Northern California banks. Sometimes reluctant to offer long-term loans to small firms, lenders are protected by the SBA's guaranteed loan program. The 7(a) loan program -- SBA's primary business loan program -- helps small businesses obtain financing when they may not be eligible for loans through normal lending channels. "The 7(a) could drop a little as it is tied to the prime rate," Mark Quinn, director of the SBA's San Francisco office, said. "The high costs of energy and real estate are also at play here." There is also a 504 program, which assists small businesses requiring brick and mortar financing (real estate or machinery, for example, for expansion or modernization). "But the 504 program and total dollar amount is expected to go up," he added.